EXHIBIT 99.2
AMENDMENT XX. 0
XXXXXXXXX XX. 0 dated as of December 29, 2003 (the "Amendment") to the
Amended and Restated Credit and Guaranty Agreement dated as of March 28, 2003,
as amended by Amendment No. 1 dated as of June 16, 2003 (as so amended , the
"Credit Agreement") among Reliant Resources, Inc., as a Borrower and a Guarantor
("RRI"), the other Credit Parties referred to therein, as Borrowers and/or
Guarantors, the lenders referred to therein (the "Lenders"), Bank of America,
N.A., as Administrative Agent, as Collateral Agent and as an Issuing Bank,
Barclays Bank PLC and Deutsche Bank AG, New York Branch, as Syndication Agents,
Citicorp USA, Inc., as Tranche A Agent and Citibank, N.A., as Tranche A
Collateral Agent.
INTRODUCTORY STATEMENT
All capitalized terms not otherwise defined in this Amendment are used
herein as defined in the Credit Agreement.
RRI is proposing to (1) terminate the Senior Priority Facility, (2) use
all of the deposits in the Purchase Escrow Account to prepay Term Loans and
Tranche A Loans with such deposits to the extent required under Section 5.18(e)
of the Credit Agreement if the Purchase Escrow Account were terminated, (3)
prepay outstanding Revolving Credit Loans (but not reduce the Total Revolving
Credit Commitment) in an amount equal to 50% of the proceeds of the Junior
Securities issued on or before the Amendment No. 2 Effective Date that in
accordance with Section 5.18 would be released to RRI for general corporate
purpose if the Purchase Escrow Account were terminated, and (4) amend the Credit
Agreement (a) to have the ability to replace the Senior Priority Facility at a
later date with another senior priority or pari passu credit facility and (b) to
permit the acquisition of certain assets to support its retail business in
Texas. In addition, RRI has requested that certain other amendments to the
Credit Agreement be made all as herein set forth.
Subject to the terms and conditions hereof, the Lenders are willing to
agree to such amendment, but only upon the terms and conditions set forth
herein.
In consideration of the mutual agreements contained herein and other good
and valuable consideration the receipt of which is hereby acknowledged, the
parties hereto hereby agree as follows:
SECTION 1. Amendments to the Credit Agreement.
(A) The definition of "Excluded Cash" in Article 1 of the Credit
Agreement is hereby amended by adding the following new clause at the end
thereof immediately after the word "Days":
", and (vii) until the Final Expiration Date of the Usage Period
applicable to the Indebtedness described below, Net Cash Proceeds
from the issuance of Indebtedness permitted by Section 6.1(p) or
Section 6.1(s) hereof, which Net Cash Proceeds are held in a
segregated deposit account with the Administrative Agent or a
Securities Account with an affiliate of the Administrative Agent
(which account (in either case) is subject to a Control Agreement in
form and substance satisfactory to the Administrative Agent)."
(B) The definition of "Material Indebtedness" in Article 1 of the
Credit Agreement is amended in its entirety to read as follows:
"'Material Indebtedness' shall mean (i) Indebtedness (other than the
Loans and Letters of Credit) of any one or more of the Credit
Parties and/or Subsidiaries of a Credit Party in an aggregate
principal amount exceeding $50,000,000 and (ii) Indebtedness under
any Replacement Senior Priority Facility. For purposes of
determining Material Indebtedness set forth in clause (i) above, the
"principal amount" of the obligations of any Credit Party or
Subsidiary thereof in respect of any Hedging Agreement at any time
shall be the maximum aggregate amount (after giving effect to any
enforceable netting agreements) that such Credit Party or Subsidiary
would be required to pay if such Hedging Agreement were terminated
at such time."
(C) The definition of "Specified Date" in Article 1 of the Credit
Agreement is amended in its entirety to read as follows:
"'Specified Date' shall mean the earliest to occur of (i) September
15, 2004 without a definitive agreement being executed in connection
with a Permitted TG Purchase Transaction and without the Texas Genco
Option having been exercised, (ii) the consummation date of the
purchase of 100% of the equity of Texas Genco by RRI or any of its
Subsidiaries and the payment of any control premium in connection
therewith, (iii) the date that CenterPoint or any of its
Subsidiaries sells or otherwise disposes of more than twenty percent
(20%) of the issued and outstanding common stock of Texas Genco to a
Person other than RRI or one of its Subsidiaries, (iv) the Outside
Date, and (v) the date on which RRI voluntarily terminates the
Purchase Escrow Account in accordance with Section 5.18(k) hereof."
(D) The definition of "TG Basket Amount" in Article 1 of the Credit
Agreement is hereby deleted in its entirety.
(E) The last sentence of the definition of "Total Senior Priority
Commitment" in Article 1 of the Credit Agreement is hereby amended in its
entirety to read as follows:
"On the Amendment No. 2 Closing Date, the Total Senior Priority
Commitment was terminated."
(F) The following definitions are hereby added to Article 1 of the
Credit Agreement in alphabetical order:
"'Amendment No. 2 Closing Date' shall mean the Amendment No. 2
Effective Date (as such term is defined in Amendment No. 2 dated as
of December 29, 2003, to this Credit Agreement).
'Basket Debt Amount' shall mean, on any date of determination, an
amount equal to the sum of: (i) the aggregate original principal
amount of all Indebtedness of a Credit Party incurred to finance the
acquisition of Permitted ERCOT Assets as contemplated by Section
6.1(s) hereof, plus
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(ii) the aggregate principal amount of any Indebtedness assumed or
acquired by a Credit Party or a Subsidiary of a Credit Party upon,
and in connection with, the acquisitions of Permitted ERCOT Assets
as contemplated by Section 6.1(t) hereof, plus (iii) 50% of the
aggregate original principal amount of Junior Debt Securities issued
since the Amendment No. 2 Closing Date the Net Cash Proceeds of
which have been used to finance the acquisition of Permitted ERCOT
Assets, plus (iv) the aggregate outstanding original amount of
Junior Debt Securities the Net Cash Proceeds of which have been
deposited into the Purchase Escrow Account pursuant to Section
5.18(a) hereof and have been used to purchase the equity of Texas
Genco as contemplated by Section 5.18 hereof.
'ERCOT Asset Purchase Price' shall mean, for any acquisition (or
series of related acquisitions pursuant to a single purchase and
sale agreement) of Permitted ERCOT Assets, the aggregate amount of
all cash paid and the outstanding principal amount of all
Indebtedness assumed or acquired by a Credit Party or a Subsidiary
of a Credit Party upon and in connection with, such acquisition as
permitted by Section 6.1(t) hereof.
'Final Expiration Date' shall have the meaning given to such term in
the definition of "Usage Period" set forth in this Article 1.
'Final Senior Priority Lender' shall mean each Senior Priority
Lender as of December 15, 2003.
'Initial Expiration Date' shall have the meaning given to such term
in the definition of "Usage Period" set forth in this Article 1.
'Junior Debt Securities' shall mean senior subordinated notes issued
by RRI which notes constitute Junior Securities hereunder.
'Permitted ERCOT Assets' shall mean (i) electric generating assets
together with assets related thereto (including any assets related
to the operation and fuel supply of such electric generating assets)
which electric generating assets support the Credit Parties' retail
business solely in the State of Texas, including, without
limitation, electric generating assets owned by Texas Genco; and
(ii) all (but not less than all) of the Equity Interests of any
Person that owns solely Permitted ERCOT Assets (whether directly or
through one or more wholly-owned Subsidiaries) described in clause
(i) above; provided, however, that the term "Permitted ERCOT Asset"
shall not include any Equity Interest in Texas Genco or TG Holdco.
'Replacement Senior Priority Facility' shall mean a credit facility
of up to $300 million that (a) qualifies as the "Credit Agreement
Priority Facility" under the terms of the Secured Note Agreements in
effect on December 31, 2003, (b) provided only one or more Credit
Parties shall be direct or contingent obligors in respect of such
Indebtedness, (c) has a rate of interest that does not exceed the
then applicable market rate of interest for Indebtedness having
comparable terms, (d) has material terms
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which, together with the terms of any related agreement or
instrument entered into in connection therewith, taken as whole, are
no less favorable in any material respect to the obligors thereof
and to the Lenders, the Revolver Issuing Banks and the Agents than
the terms of this Credit Agreement and the other Fundamental
Documents, (e) is subject to a condition to funding at least as
restrictive as the Senior Priority Anti-Hoarding Condition, (f)
limits the use of loan proceeds solely to secure or to prepay
obligations for RRI and its Subsidiaries' ongoing commercial and
trading operations, and not for other general corporate or other
working capital purposes, (g) is only secured with Replacement
Senior Priority Facility Liens, and (h) has terms that are permitted
under each Secured Note Agreement.
'Replacement Senior Priority Facility Liens' shall mean Liens in the
Collateral that (a) qualify as "Credit Agreement Priority Facility
Liens" under the terms of the Secured Note Agreements in effect on
December 31, 2003, (b)(i) are senior to the Shared Collateral and
the Separate Collateral to the same extent as such Credit Agreement
Priority Facility Liens under the Collateral Trust Agreement and the
Senior Note Agreement, all as in effect on December 31, 2003 or (ii)
are pari passu with the Shared Collateral and the Separate
Collateral, (c) are otherwise granted to the Collateral Trustee and
are permitted by and subject to the Collateral Trust Agreement, and
(d) are permitted under each Secured Note Agreement.
'Usage Period' shall mean, with respect to any Indebtedness issued
pursuant to Section 6.1(s) hereof, or any Indebtedness which is
issued pursuant to Section 6.1(p) and the Net Cash Proceeds of which
are being held in a segregated account as contemplated by clause
(vii) of the definition of "Excluded Cash" herein, the period
beginning on the date the Net Cash Proceeds of such Indebtedness are
deposited in the segregated account for purposes of an acquisition
contemplated by Sections 6.3(x) and 6.5(b)(vi) and ending one
hundred eighty days (180) thereafter (such date being referred to as
the "Initial Expiration Date") subject to the following:
(i) if on or prior to the applicable Initial Expiration
Date, a definitive purchase agreement with one or more
unaffiliated third parties has been fully executed with
respect to the applicable acquisition transaction to be
financed (in whole or in part) by such Indebtedness, then the
applicable Initial Expiration Date for such Indebtedness shall
be extended until the termination of such definitive agreement
or the closing of the applicable transaction;
(ii) if any definitive agreement set forth in clause (i)
is terminated prior to the closing of the applicable
transaction, then the applicable Initial Expiration Date shall
be further extended by an additional period of one hundred
eighty days (180) from the date of such termination; and
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(iii) if a second definitive agreement with one or more
unaffiliated third parties has been fully executed with
respect to an acquisition transaction which is to be financed
(in whole or in part) by such Indebtedness on or before the
extended Initial Expiration Date pursuant to clause (ii)
above, then the Initial Expiration Date shall be further
extended until the termination of such definitive agreement or
the closing of the applicable transaction (the Initial
Expiration Date, as it may be extended pursuant to any of the
foregoing clauses (i)-(iii) above, shall be referred to herein
as "Final Expiration Date"); provided, however, that the
Initial Expiration Date or the Final Expiration Date may be
extended at any time with the prior written consent of the
Agents."
(G) Section 2.11(f) of the Credit Agreement is hereby amended by
inserting the following new sentence at the end thereof.
"Immediately upon the expiration of the Usage Period with respect to
any Indebtedness permitted under Section 6.1(s), to the extent that
the Net Cash Proceeds of such Indebtedness have not been used during
the applicable Usage Period to purchase Permitted ERCOT Assets as
contemplated by Sections 6.3(x) and 6.5(b)(vi) hereof, RR1 shall
prepay or cause to be prepaid Loans (determined as provided in
Sections 2.11(k) and 2.11(l) below) in an amount equal to 100% of
such Net Cash Proceeds."
(H) Paragraph (g) of Section 5.1 of the Credit Agreement is amended in
its entirety to read as follows:
"(g)(i) On or before the earlier of (X) fifteen (15) days after the
forecast discussed in this Section 5.1(g) is presented to RRI's
Board of Directors and (Y) April 15, 2004 and January 31 of each
calendar year thereafter, and (ii) on or before July 31 of each
calendar year, a monthly liquidity forecast for the twelve (12)
month period beginning on January 1 and July 1, respectively, of
such calendar year substantially in the form set forth in the
January 22, 2003 Lender Presentation;"
(I) Paragraph (h) of Section 5.1 of the Credit Agreement is amended in
its entirety to read as follows:
"(h) On or before the earlier of (i) fifteen (15) days after the
business plan referred to herein is presented to RRI's Board of
Directors and (ii) April 15, 2004 and January 31 of each calendar
year thereafter, an updated business plan on a consolidated and
deconsolidated basis for RRI and its Consolidated Subsidiaries, and
for RRI and its Consolidated Subsidiaries exclusive of the Excluded
Entities, showing in each case, the projections and forecasts of the
financial condition and operations for such parties for each fiscal
quarter of the immediately succeeding fiscal year and for each
annual period for the succeeding four fiscal years, with supporting
assumptions and schedules (it being understood that such
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business plan and level of detail shall be in a format substantially
similar to the January 22, 2003 Lender Presentation);"
(J) Paragraph (i) of Section 5.1 of the Credit Agreement is amended in
its entirety to read as follows:
"(i) With respect to each fiscal quarter ending on or prior to
September 30, 2003, within forty-five (45) days after the end of
each such fiscal quarter, such information as required pursuant to
the FA Engagement Letter (which letter shall require that RRI
deliver the information set forth therein to the applicable
financial advisor of the Administrative Agent only, with respect to
each such fiscal quarter occurring after the Closing Date);"
(K) Section 5.1(j) of the Credit Agreement is amended in its entirety
to read as follows:
"(j) Promptly after the acquisition of any Permitted ERCOT Asset,
notice thereof to the Agents;"
(L) Section 5.11 of the Credit Agreement is hereby amended by adding a
new Subsection (e) at the end thereof as follows:
"(e) In connection with the acquisition of any Permitted ERCOT
Assets pursuant to Section 6.3(x) and Section 6.5(b)(vi) hereof,
this Section 5.11 shall not apply to any Person acquiring or holding
Permitted ERCOT Assets to the extent the terms of the Indebtedness
permitted to be incurred or assumed by such Person pursuant to the
terms of Section 6.1(t) hereof would prohibit or restrict such
Person that is the direct borrower of such Indebtedness (or any
subsidiary of such borrower) from complying with this Section 5.11;
provided, that the Person acquiring such Permitted ERCOT Assets
causes all such Permitted ERCOT Assets to become Shared Collateral
and takes all steps necessary to cause Liens in favor of the
Collateral Trustee to be granted, in each case to the extent and in
the manner set forth in Section 6.1(s)(iii) hereof."
(M) Section 5.14(a) of the Credit Agreement is hereby amended in its
entirety to read as follows:
"(a) Subject to the immediately succeeding sentence, use the
proceeds of Revolving Credit Loans solely for working capital and
other general corporate purposes which are not otherwise prohibited
by the terms of this Credit Agreement or any of the other
Fundamental Documents. RRI hereby agrees that no proceeds of
Revolving Credit Loans may be used to purchase any Equity Interests
of Texas Genco or to purchase any Permitted ERCOT Asset, or to fund
any portion of any ERCOT Asset Purchase Price."
(N) Section 5.18 of the Credit Agreement is hereby amended in its
entirety to read as set forth on Annex A hereto.
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(O) Section 5.20 of the Credit Agreement is hereby amended by adding
the following new subsection at the end thereof:
"(c) If requested, deliver to the Administrative Agent, the
Collateral Trustee and their respective counsel, on or before
January 31, 2004 (or such later date as shall be agreed to by the
Administrative Agent), an amendment to the Securities Account
Control Agreement previously executed with respect to the Purchase
Escrow Account which amendment (i) shall modify the provisions of
such Control Agreement to conform to the revised Section 5.18 hereto
in effect after the Amendment No. 2 Closing Date and (ii) shall be
in form and substance reasonably satisfactory to the Administrative
Agent and its counsel."
(P) Section 5.24 of the Credit Agreement is hereby amended:
(i) by inserting the phrase "or Section 6.1(s)" immediately after
the phrase "Section 6.1(b)(i)" appearing in the second line thereof; and
(ii) by inserting the phrase ", or Section 6.1(s) and 6.2(w) (as
applicable)" immediately after the phrase "6.1(b)(i) and 6.2(w)" appearing
in the third line thereof.
(Q) Clause (i) of Section 6.1(p) of the Credit Agreement is hereby
amended (i) by deleting the word "and" at the end thereof, and (ii) by adding
the following new proviso at the end of such clause, immediately after the words
"Fundamental Documents":
"provided, further, however, (A) that if such Indebtedness is being
issued to finance (in whole or in part) the acquisition of a
Permitted ERCOT Asset and if RRI or any Subsidiary of RRI has
purchased the equity of Texas Genco as contemplated by Section 5.18
hereof, then the aggregate original principal amount of such
Indebtedness shall not exceed the lesser of: (I) an amount equal to
$1 billion minus the then current Basket Debt Amount, and (II) $250
million; and (B) that if such Indebtedness is being issued to
finance (in whole or in part) the acquisition of a Permitted ERCOT
Asset and if RRI or any Subsidiary of RRI has not purchased the
equity of Texas Genco as contemplated by Section 5.18 hereof, then
the aggregate original principal amount of such Indebtedness shall
not exceed an amount equal to $1 billion minus the then current
Basket Debt Amount; and"
(R) Section 6.1 of the Credit Agreement is hereby amended:
(i) by substituting "; and" for the period at the end of paragraph
(q); and
(ii) by adding the following new paragraphs (r), (s), and (t):
"(r) Indebtedness under a Replacement Senior Priority
Facility;
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(s) Indebtedness the Net Cash Proceeds of which are used prior
to the Final Expiration Date of the applicable Usage Period for such
Indebtedness, to acquire Permitted ERCOT Assets, provided, that:
(i) (A) if RRI or any Subsidiary of RRI has purchased
the equity of Texas Genco as contemplated by Section 5.18
hereof, then the aggregate original principal amount of such
Indebtedness shall not exceed the lesser of: (I) an amount
equal to $1 billion minus the then current Basket Debt Amount,
and (II) $250 million; and (B) if RRI or any Subsidiary of RRI
has not purchased the equity of Texas Genco as contemplated by
Section 5.18 hereof, then the aggregate original principal
amount of such Indebtedness shall not exceed an amount equal
to $1 billion minus the then current Basket Debt Amount;
(ii) such Indebtedness (A) qualifies as "Sharing
Eligible Debt" under the Senior Note Agreements as in effect
on December 31, 2003, and is otherwise permitted under each
Senior Note Agreement, (B) provides for a final maturity no
earlier than ninety (90) days after the Final Maturity Date
and requires no principal amortization prior to the Final
Maturity Date, (C) provides that only one or more Credit
Parties shall be direct or contingent obligors in respect of
such Indebtedness, (D) specifies a rate of interest that does
not exceed the then applicable market rate of interest for
Indebtedness having comparable terms, and (E) has material
terms which, together with the terms of any related agreement
or instrument entered into in connection therewith, taken as
whole, are no less favorable in any material respect to the
obligors thereof than the terms of this Credit Agreement and
the other Fundamental Documents; and
(iii) upon the acquisition of Permitted ERCOT Assets
with the proceeds of such Indebtedness, (A)(1) substantially
all Permitted ERCOT Assets which are not Equity Interests,
whether acquired directly by a Credit Party or owned and held
by a Person (or one or more of such Person's Subsidiaries)
whose Equity Interests were acquired directly by a Credit
Party, shall become Shared Collateral and (2) any Equity
Interests of a Person constituting Permitted ERCOT Assets
acquired directly by a Credit Party or issued by a Subsidiary
of an acquired Person shall become Shared Collateral or
Separate Collateral and (B) the Liens in favor of the
Collateral Trustee (1) encumbering such Permitted ERCOT Assets
which are not Equity Interests of a Person directly acquired
by a Credit Party shall, to the extent not prohibited under
the corresponding Indebtedness, if any, under Section 6.1(t),
be first priority Liens and in all other cases, shall be
second priority Liens, which second priority Liens shall be
subject to intercreditor arrangements reasonably satisfactory
to the Agents, and (2) encumbering any Equity Interests
constituting Permitted ERCOT
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Assets that were directly acquired by a Credit Party shall be
first priority Liens;
(vi) promptly, but in not event later than three (3)
Business Days after the receipt of any Net Cash Proceeds by
any Credit Party from the issuance by any Credit Party of any
Indebtedness described in this Section 6.1(s), RRI shall cause
to be deposited 100% of such Net Cash Proceeds received by a
Credit Party into the segregated account contemplated by
clause (vii) of the definition of "Excluded Cash" herein; and
(t) Indebtedness assumed by a Credit Party or any Subsidiary
of a Credit Party (or acquired in connection with the acquisition of
Equity Interests of a Person that owns Permitted ERCOT Assets as
described in clause (ii) of the definition of "Permitted ERCOT
Assets"), in either case which is (i) secured by any Permitted ERCOT
Asset described in clause (i) of the definition thereof, or (ii) of
an entity that solely, directly or indirectly, owns Permitted ERCOT
Assets, in either case in existence at the time of the acquisition
of such asset or entity by a Credit Party or a Subsidiary of a
Credit Party (not in violation of any of the terms hereof);
provided, that (A) such Indebtedness existed at the time the asset
or entity was acquired and was not created in anticipation of the
acquisition thereof, (B) such Indebtedness is recourse only to the
specific asset acquired or entity and is otherwise non-recourse to
RRI or any other Credit Party, (C) such Indebtedness does not
contain cross-default or cross-acceleration provisions to the Credit
Agreement, any Replacement Senior Priority Facility or any Secured
Note Agreement (D) the outstanding principal amount of each such
issue of Indebtedness does not exceed 25% of the ERCOT Asset
Purchase Price for the related acquisition (or series of related
acquisitions pursuant to any single purchase and sale agreement) of
Permitted ERCOT Assets or of entities that solely, directly or
indirectly, own Permitted ERCOT Assets, (E) if RRI or any Subsidiary
of RRI has purchased the equity of Texas Genco as contemplated by
Section 5.18 hereof, then the aggregate original principal amount of
any such Indebtedness being assumed or acquired shall not exceed at
any time, the lesser of: (I) an amount equal to $1 billion minus the
then current Basket Debt Amount, and (II) $250 million; and (F) if
RRI or any Subsidiary of RRI has not purchased the equity of Texas
Genco as contemplated by Section 5.18 hereof, then the aggregate
original principal amount of any such Indebtedness shall not exceed
an amount equal to $1 billion minus the then current Basket Debt
Amount;"
(S) The following paragraph is hereby added at the end of Section 6.1
of the Credit Agreement, immediately after new subsection (t) thereto being
added to the Credit Agreement by this Amendment:
"Notwithstanding the foregoing subsections (a) through (t) of this
Section 6.1, in order to acquire Permitted ERCOT Assets no
Indebtedness shall be issued, assumed or acquired by RRI or any
Subsidiary of RRI other than pursuant to Section 6.1(p) (subject to
the
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provisions of Section 2.11(g) hereof), Section 6.1(s) or Section
6.1(t) above (as appropriate)."
(T) Paragraph (m) of Section 6.2 of the Credit Agreement is amended in
its entirety to read as follows:
"(m) Liens on an asset at the time of acquisition of such
asset by a Credit Party or a Subsidiary thereof; provided, that (i)
such Liens existed at the time of such acquisition and were not
created in anticipation or contemplation of the acquisition of such
asset, (ii) any such Lien does not by its terms cover any property
or assets other than the property or assets acquired, and (iii) any
such Lien does not by its terms secure any Indebtedness other than
Indebtedness permitted pursuant to Sections 6.1(h) or (t) hereof;"
(U) Paragraph (w) of Section 6.2 of the Credit Agreement is amended in
its entirety to read as follows:
"(w) Liens securing Indebtedness permitted under Section
6.1(b), 6.1(l), 6.1(q), and/or 6.1(s) hereof; provided, that any
Liens securing Indebtedness permitted under Sections 6.1(b) and
6.1(s) shall be granted to the Collateral Trustee and shall be
subject to the Collateral Trust Agreement;"
(V) Section 6.2 of the Credit Agreement is hereby further amended:
(i) by substituting "; and" for the period at the end of
paragraph (x) and
(ii) by adding the following new paragraph (y):
"(y) Replacement Senior Priority Facility Liens."
(W) Section 6.3 of the Credit Agreement is amended:
(i) by deleting "and" at the end of paragraph (v);
(ii) by substituting "; and" for the period at the end of
paragraph (w); and
(iii) by adding the following new paragraph (x):
"(x) acquisitions of Permitted ERCOT Assets by a Credit
Party (i) for an ERCOT Asset Purchase Price for each
transaction (or related series of transactions pursuant to any
single purchase and sale agreement) that is no more than the
fair market value of the assets being acquired and (ii) for an
aggregate ERCOT Asset Purchase Price which when added to the
aggregate ERCOT Asset Purchase Price of all other acquisitions
of Permitted ERCOT Assets previously made or being
simultaneously made, does not exceed the following amount: (A)
if RRI or any Subsidiary of RRI has purchased the equity of
Texas Genco as contemplated by Section 5.18 hereof, the lesser
of: (I) an amount equal to $1 billion minus the then current
Basket Debt Amount, and (II) $250
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million; or (B) if RRI or any Subsidiary of RRI has not
purchased the equity of Texas Genco as contemplated by Section
5.18 hereof, an amount equal to $1 billion."
(X) The last sentence of Section 6.3 of the Credit Agreement is amended
in its entirety to read as follows:
"Notwithstanding the foregoing, each Credit Party agrees that
it may not, and it will not permit any of its Subsidiaries to,
(I) make any acquisition of any Person, any line of business,
or all or substantially all of the assets of any Person or
line of business, except pursuant to Section 6.3(k), (u), or
(x) above or Section 6.5(b)(vi) below or (II) make any
acquisition of any Permitted ERCOT Asset, except pursuant to
Section 6.3(x) above or Section 6.5(b)(vi)."
(Y) Section 6.4(b) of the Credit Agreement is hereby amended:
(i) by adding "6.1(s), 6.1(t)" after the number "6.1(j), 6.1(l)"
appearing in the third line thereof;
(ii) by adding a new clause (iv) immediately after the end of clause
(iii) thereof as follows:
"(iv) prepayment (whether in cash, securities or other property) in
whole only (and not in part) in respect of any Indebtedness incurred
pursuant to Section 6.1(t) hereof, provided that upon the prepayment
in whole of such Indebtedness all Liens securing such Indebtedness
are released and discharged and the priority of the Lien in favor of
the Collateral Trustee encumbering the Permitted ERCOT Assets
financed in part by such Indebtedness ranks, to the extent legally
permitted, as a first-priority Lien; and"
(iii) By amending clause (iv) thereof in its entirety to read as new
clause (v) as follows:
"(v) to make optional prepayments or other voluntary payments or
distributions (whether in cash, securities or other property) in
respect of Indebtedness incurred pursuant to Section 6.1(e), 6.1(g),
6.1(h) or 6.1(t) or any renewal or refinancing of any of the
foregoing permitted by Section 6.1(n) hereof, up to an aggregate
principal amount of $25,000,000 over the term of this Credit
Agreement, and provided, that in all of the foregoing cases
described in clause (i) through (v) above, at the time of any such
prepayment, voluntary payment or distribution, no Event of Default
shall have occurred and then be continuing, and"
(iv) By amending clause (v) thereof to be renumbered as a new clause
(vi) and inserting the words "or Section 6.1(s)" immediately after the phrase
"Section 6.1(b)" appearing therein.
(Z) Paragraph (b) of Section 6.5 of the Credit Agreement is amended:
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(i) by deleting "and" at the end of clause (iv);
(ii) by substituting "; and" for the period at the end of clause
(v); and
(iii) by adding the following new clause (vi):
"(vi) the acquisition of a Permitted ERCOT Asset pursuant to,
and meeting the criteria set forth in, Section 6.3(x) hereof."
(AA) Section 6.9 of the Credit Agreement is amended by adding a new
paragraph (f) as follows:
"(f) Permitted ERCOT Assets. Consolidated Capital Expenditures (i)
in connection with the acquisition of Permitted ERCOT Assets as permitted
by Section 6.3(x) and/or Section 6.5(b)(vi) of this Agreement, and (ii)
for the maintenance, operation or replacement (including expenditures to
improve operating efficiencies and environmental compliance) of the
Permitted ERCOT Assets in connection with the operation of such assets, in
annual amounts that are prudent and appropriate for the size, age, and
technology of such assets determined by agreement between RRI and the
Agents negotiated in good faith."
(BB) Clause (ii)(C) in the proviso to Section 6.11 of the Credit
Agreement is amended in its entirety to read as follows:
"(C)(1) restrictions and conditions set forth in any agreement
creating or evidencing any Indebtedness permitted by Section
6.1(b)(i), (r), or (s) hereof; provided, that any such Indebtedness
and such restrictions and conditions continue to satisfy each of the
conditions set forth in such Section 6.1(b)(i), (r), or (s); and (2)
restrictions and conditions set forth in any agreement creating or
evidencing any Indebtedness permitted by Section 6.1(t) hereof;
provided, that any such restrictions or conditions described in
clause (2) above were consented to by the Agents, in their sole
discretion, and such Indebtedness and such restrictions and
conditions otherwise continue to satisfy each of the conditions set
forth in such Section 6.1(t),"
(CC) Section 7(f) of the Credit Agreement is hereby amended by
inserting the words "or Section 6.1(s)" immediately after the phrase "Section
6.1(b)(i)" appearing in clause (ii) of the parenthetical phrase appearing at the
end of such section.
(DD) Section 10.1(c) of the Credit Agreement is hereby amended by (i)
deleting the period at the end of clause (vii) appearing therein and inserting
"; and" in lieu thereof; and (ii) inserting the following new clause immediately
after such clause (vii):
"(viii) to enter into (and/or authorize the Collateral Trustee to
enter into) intercreditor and/or subordination agreements and
amendments to the Security Documents, on terms acceptable to the
Agents, in connection with any Replacement Senior Priority
Facility."
(EE) The following new Section 11.28 is thereby added to the Credit
Agreement immediately after Section 11.27 appearing therein:
12
"SECTION 11.28 Replacement Senior Priority Facility First Refusal
Right.
(a) RRI agrees to give each Final Senior Priority Lender and the
Administrative Agent a copy of any "request for proposal" (or similar
document) for a Replacement Senior Priority Facility promptly, but in any
event within two (2) days after RRI sends such request to any Person, and
to provide each Final Senior Priority Lender within one (1) Business Day
of its request, with any and all due diligence materials delivered by, or
on behalf of, RRI or any of its Affiliates or advisors to any Person
receiving such request.
(b) Promptly after its receipt of a binding commitment for a
Replacement Senior Priority Facility from any Person who is not a Final
Senior Priority Lender (an "Outside Commitment"), RRI agrees to give each
Final Senior Priority Lender written notice of such commitment along with
a copy of such commitment. The Final Senior Priority Lenders shall then
have a right of first refusal to provide to RRI on or before 5:00 p.m. New
York time on the tenth (10th) day (the "SPF Commitment Date") after their
receipt of such notice, a commitment for a Replacement Senior Priority
Facility that is for the entire amount of the Outside Commitment (the
"Replacement SPF Commitment"), with same or lower pricing, and otherwise
substantially identical to, the Outside Commitment. Although this right of
first refusal is for the Final Senior Priority Lenders, not all of the
Final Senior Priority Lenders shall be required to participate in the
commitment, which commitment may be provided in part by any Revolving
Credit Lender (such Revolving Credit Lenders and Final Security Priority
Lenders executing the Replacement SPF Commitment collectively, the
"Replacement SPF Lenders").
(c) If a commitment is timely received from the Replacement SPF
Lenders on or before 5:00 p.m. New York time on the SPF Commitment Date,
is in an amount at least equal to the amount of the Outside Commitment,
has pricing that is the same or lower than the Outside Commitment's
pricing, and is otherwise substantially identical to the Outside
Commitment, the Replacement SPF Lenders that provide the Replacement SPF
Commitment by such time shall have the right to provide the entire
Replacement Senior Priority Facility on or before the date which is the
later of (i) the date on which the Outside Commitment expires and (ii) ten
(10) Business Days after RRI's acceptance of the Replacement SPF
Commitment from the Replacement SPF Lenders.
(d) If (i) no Replacement SPF Commitment is delivered by such time,
(ii) the Final Senior Priority Lenders decline in writing to provide such
a commitment, or (iii) the Replacement SPF Lenders fail to close the
transactions contemplated in the Replacement SPF Commitment on, or before
the date which is the later of (X) the date on which the Outside
Commitment expires and (Y) ten (10) Business Days after RRI's acceptance
of the Replacement SPF Commitment, then subject to the terms of Section
11.28(e) below, the Replacement SPF Lenders shall no longer have any
further rights under this Section 11.28.
13
(e) In the event RRI fails to consummate the closing of the
financing set forth in the Outside Commitment by the date which is
thirty (30) days after the date on which the Outside Commitment
expires, or if the terms of the financing set forth in the Outside
Commitment are changed or supplemented in any material respect, then
RRI shall provide written notice to each Final Senior Priority
Lender pursuant to Section 11.28(a) and the Final Senior Priority
Lenders shall again have a right of first refusal to provide a
commitment for a Replacement Senior Priority Facility pursuant to
the terms of this Section 11.28. For the avoidance of doubt, it is
understood and agreed by the parties hereto that any change in the
economics of the Outside Commitment or the economics of the credit
facility proposed therein (including, without limitation, the tenor
of such facility, interest rate and/or fees applicable thereto, the
collateral or any priority or preferential rights) shall constitute
a material change in the terms of the financing set forth in the
Outside Commitment."
(FF) Schedule 6.5 of the Credit Agreement is hereby amended by adding
the following new item at the end thereof:
"41. (A) any assets owned by Texas Genco or any of its Subsidiaries
upon the acquisition of the equity of Texas Genco as contemplated by
Section 5.18 hereof, (B) the equity of Texas Genco or (C) any
Permitted ERCOT Assets upon the acquisition thereof in accordance
with Sections 6.3(x) and 6.5(b)(vi). For purposes of Section
2.11(h)(i), the foregoing assets in this item 41 are Eligible
Assets, even if owned by a Non-Credit Party."
SECTION 2. Waivers, Consents and Agreements.
(A) In connection with the satisfaction of the condition precedent set
forth in Section 4(D) hereof, the Lenders hereby waive the requirement set forth
in Section 2.10(b) of the Credit Agreement that three (3) Business Days' prior
notice be given to the Administrative Agent to terminate the Total Senior
Priority Commitment.
(B) The Lenders hereby consent and agree that RRI may withdraw all of
the funds on deposit in the Purchase Escrow Account provided, that such funds
are immediately used to make the prepayment of the Term Loans and the Revolving
Credit Loans as contemplated by Section 4(C) hereof.
(C) The Lenders hereby waive any requirement set forth in the Credit
Agreement that prior notice be given to the Administrative Agent or any of
Lenders in connection with the prepayment of the Term Loans and the Revolving
Credit Loans as contemplated by Section 4(C) hereof and that such prepayment be
accompanied by payments required by Section 2.14 hereof (such waiver relating
solely to the timing of any payments required by Section 2.14, and not to the
obligation to make such payments).
SECTION 3. Representations and Warranties. Each of the Credit Parties
represents and warrants as of the date hereof and as of the Amendment No. 2
Effective Date (as defined below), to each of the Agents, the Issuing Banks and
the Lenders that:
(A) the execution, delivery and performance by each of the Credit
Parties of this Amendment, the Credit Agreement as modified by this Amendment,
and any other documents delivered
14
pursuant to Section 3 hereof to which such Credit Party is a party (i) have been
duly authorized by all requisite corporate, partnership or limited liability
company action (as applicable) on the part of each such Credit Party; and (ii)
will not violate (x) any provision of any statute, rule or regulation, or any
Organizational Document of any of the Credit Parties, (y) any applicable order
of any court or any rule, regulation or order of any other agency of government,
or (z) any indenture, agreement or other instrument to which any of the Credit
Parties is a party or by which any of the Credit Parties or any of their
respective properties is bound, or be in conflict with, result in a breach of,
constitute (with notice or lapse of time or both) a default under, or create any
right to terminate, any such indenture, agreement, or other instrument;
(B) upon the occurrence of the Amendment No. 2 Effective Date, this
Amendment and each other agreement delivered pursuant to Section 3 hereof will
constitute the legal, valid and binding obligation of the applicable Credit
Parties that are party thereto, enforceable in accordance with its terms, except
as the enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization or other similar laws affecting creditors' rights
generally and by general equitable principles (regardless of whether the issue
of enforceability is considered in a proceeding in equity or at law);
(C) no Default or Event of Default shall have occurred and then be
continuing under the Credit Agreement;
(D) the Credit Parties have obtained all consents and waivers from any
Persons necessary for the execution, delivery and performance of this Amendment
and any other document or transaction contemplated hereby; and
(E) after giving effect to this Amendment, all representations and
warranties set forth in the Credit Agreement and the other Fundamental Documents
are true, correct and complete in all material respects on and as of the date
hereof with the same effect as if such representations and warranties had been
made on and as of the date hereof, unless such representation and warranty is as
of a specific date, in which case, as of such date.
SECTION 4. Effective Date. This Amendment shall not become effective until
the date on which all of the following conditions precedent shall have been
satisfied, or waived in writing (such date being referred to herein as the
"Amendment No. 2 Effective Date"):
(A) The Administrative Agent shall have received fully executed
counterparts of this Amendment duly executed by (i) the Credit Parties, (ii) the
Agents, and (iii) the Required Lenders.
(B) The Administrative Agent shall have received a fully executed copy
of a withdrawal certificate delivered by RRI to Banc of America Securities LLC,
pursuant to that certain Amended and Restated Purchase Escrow Account Securities
Account Control Agreement, which withdrawal certificate shall request that all
funds on deposit in such Purchase Escrow Account be transferred to a Deposit
Account of RRI maintained with the Administrative Agent to be applied as
provided in the following paragraph (C).
(C) RRI shall have made a prepayment of the outstanding Term Loans and
Tranche A Loans (on a pro rata basis, determined in accordance with the
aggregate outstanding principal amount of the Term Loans and the aggregate
outstanding principal amount of the Tranche A Loans) in an aggregate principal
amount of not less than $784,000,000, and a prepayment of the outstanding
Revolving Credit Loans in an aggregate principal amount of $132,750,000, less
the amount of any Revolving Credit
15
Loans, if any, that may be borrowed on such date (without the reduction of the
Total Revolving Credit Commitment).
(D) The Administrative Agent shall have received a duly executed,
irrevocable notice permanently terminating the Total Senior Priority Commitment
in its entirety.
(E) The Administrative Agent shall have received the written opinion of
Xxxxxxxxx & Xxxxxxxxx, L.L.P., counsel to the Credit Parties, dated the
Amendment No. 2 Effective Date and addressed to the Agents, the Issuing Banks,
the Collateral Agent, the Collateral Trustee and the Lenders opining that this
Amendment and the transactions contemplated by this Amendment (including,
without limitation, the prepayment of the Loans) do not violate any provision of
any Secured Note Agreement, which opinion shall be in form and substance
reasonably satisfactory to the Administrative Agent and its counsel.
(F) The Agents and their respective counsels shall have received such
approvals, information, materials and documentation as any of the Agents or
their respective counsel may reasonably request, which approvals, information,
materials and documentation shall be reasonably satisfactory in form and
substance to the Agents and their respective counsel.
(G) All fees and other charges presently due and payable to the
Administrative Agent or any Lender pursuant to any Fundamental Document shall
have been paid by RRI (including, without limitation, any accrued, but unpaid
Senior Priority Commitment Fees).
(H) All out-of-pocket expenses incurred by the Agents and invoiced by
5:00 p.m. (New York City time) on Monday, December 22, 2003, which expenses have
been incurred in connection with the Credit Agreement, this Amendment, any other
Fundamental Document or the transactions contemplated by any of the foregoing
(including, without limitation, the reasonable fees and disbursements of
Xxxxxxxx Chance US LLP) shall have been paid by RRI.
SECTION 5. CONFIRMATION AND ACKNOWLEDGEMENT OF THE OBLIGATIONS; RELEASE. EACH
OF THE BORROWERS HEREBY (A) CONFIRMS AND ACKNOWLEDGES TO THE AGENTS, THE ISSUING
BANKS AND THE LENDERS THAT IT IS VALIDLY AND JUSTLY INDEBTED TO THE AGENTS, THE
ISSUING BANKS AND THE LENDERS FOR THE PAYMENT OF ALL OBLIGATIONS (AS DEFINED IN
THE CREDIT AGREEMENT) WITHOUT OFFSET, DEFENSE, CAUSE OF ACTION OR COUNTERCLAIM
OF ANY KIND OR NATURE WHATSOEVER AND (B) REAFFIRMS AND ADMITS THE VALIDITY AND
ENFORCEABILITY OF THE CREDIT AGREEMENT AND THE OTHER FUNDAMENTAL DOCUMENTS AND
THE LIENS IN THE COLLATERAL AND THE MORTGAGED REAL PROPERTY ASSETS WHICH WERE
GRANTED PURSUANT TO ANY OF THE FUNDAMENTAL DOCUMENTS OR OTHERWISE. EACH OF THE
CREDIT PARTIES, ON ITS OWN BEHALF AND ON BEHALF OF ITS SUCCESSORS AND ASSIGNS,
HEREBY WAIVES, RELEASES AND DISCHARGES EACH AGENT, EACH ISSUING BANK, EACH
LENDER, EACH SECURED PARTY AND ALL OF THE AFFILIATES OF EACH AGENT, EACH ISSUING
BANK, EACH LENDER AND EACH SECURED PARTY, AND ALL OF THE DIRECTORS, OFFICERS,
EMPLOYEES, ATTORNEYS, AGENTS, SUCCESSORS AND ASSIGNS OF EACH AGENT, EACH ISSUING
BANK, EACH LENDER, EACH SECURED PARTY AND SUCH AFFILIATES, FROM ANY AND ALL
CLAIMS, DEMANDS, ACTIONS OR CAUSES OF ACTION (KNOWN AND UNKNOWN) ARISING OUT OF
OR IN ANY WAY RELATING TO ANY OF THE FUNDAMENTAL DOCUMENTS AND ANY DOCUMENTS,
AGREEMENTS, DEALINGS OR OTHER MATTERS CONNECTED WITH ANY OF THE FUNDAMENTAL
DOCUMENTS, IN EACH CASE TO THE EXTENT ARISING (X) ON OR PRIOR TO THE AMENDMENT
NO. 2 EFFECTIVE DATE OR (Y) OUT OF, OR RELATING
16
TO, ACTIONS, DEALINGS OR MATTERS OCCURRING ON OR PRIOR TO THE AMENDMENT NO. 2
EFFECTIVE DATE.
SECTION 6. ACKNOWLEDGEMENT AND CONSENT BY THE GUARANTORS.
(A) EACH OF THE GUARANTORS HEREBY ACKNOWLEDGES THAT IT HAS READ THIS
AMENDMENT AND CONSENTS TO THE TERMS HEREOF AND FURTHER CONFIRMS AND AGREES THAT
ITS GUARANTEE PURSUANT TO THE CREDIT AGREEMENT (OR IN THE CASE OF OPH, THE OPH
GUARANTY AGREEMENT (AS DEFINED IN SECTION 1(V) ABOVE)) IS, AND SHALL CONTINUE TO
BE, IN FULL FORCE AND EFFECT AND IS HEREBY CONFIRMED AND RATIFIED IN ALL
RESPECTS.
(B) EACH OF THE GUARANTORS HEREBY CONFIRMS AND ACKNOWLEDGES THAT IT IS
VALIDLY AND JUSTLY INDEBTED TO THE ADMINISTRATIVE AGENT, THE ISSUING BANKS AND
THE LENDERS FOR THE PAYMENT OF ALL OF THE OBLIGATIONS WHICH IT HAS GUARANTEED,
WITHOUT OFFSET, DEFENSE, CAUSE OF ACTION OR COUNTERCLAIM OF ANY KIND OR NATURE
WHATSOEVER.
(C) EACH OF THE GUARANTORS HEREBY REAFFIRMS AND ADMITS THE VALIDITY AND
ENFORCEABILITY OF THE CREDIT AGREEMENT AND THE FUNDAMENTAL DOCUMENTS TO WHICH IT
IS A PARTY AND THE LIENS IN THE COLLATERAL AND THE MORTGAGED REAL PROPERTY
ASSETS WHICH WERE GRANTED BY IT PURSUANT TO ANY OF THE FUNDAMENTAL DOCUMENTS OR
OTHERWISE.
SECTION 7. Costs and Expenses. RRI acknowledges and agrees that its
obligations set forth in Section 11.4 of the Credit Agreement include the
preparation, execution and delivery of this Amendment and any other
documentation contemplated hereby or thereby (whether or not this Amendment
becomes effective or the transactions contemplated hereby are consummated),
including, but not limited to, the reasonable fees and disbursements of Xxxxxxxx
Chance US LLP, counsel to the Administrative Agent.
SECTION 8. Limited Waiver or Modification; Ratification of Credit Agreement.
(A) Except to the extent hereby expressly waived or modified, the
Credit Agreement remains in full force and effect and is hereby ratified and
confirmed.
(B) This Amendment shall be limited precisely as written and shall not
be deemed (i) to be a consent granted pursuant to, or a waiver or modification
of, any other term or condition of the Credit Agreement or any of the
instruments or agreements referred to therein or a waiver of any Default or
Event of Default under the Credit Agreement, whether or not known to the Agents,
the Issuing Banks or the Lenders or (ii) to prejudice any right or rights which
the Administrative Agent, the Issuing Banks, the Lenders or any of the other
Secured Parties may now have or have in the future under or in connection with
any Fundamental Document or any of the instruments or agreements referred to in
a Fundamental Document. The Administrative Agent, the other Agents, the Issuing
Banks and the Lenders hereby expressly reserve all of the Administrative
Agent's, the other Agents', the Issuing Banks', the Lenders' or any of the other
Secured Parties' (as applicable) respective rights and remedies under the Credit
Agreement and each of the other Fundamental Documents, as well as under
applicable law. No failure to exercise, delay in exercising or any singular or
partial exercise, by the Administrative Agent, the Agents, any of the Issuing
Banks, any of the Lenders or any of the other Secured Parties, of any right,
power or remedy hereunder or any of the other Fundamental Documents shall
operate as a waiver thereof or in the case of a singular or partial exercise of
a right, power or
17
remedy, preclude any other or further exercise thereof of any other right, power
or remedy, nor shall any of the Fundamental Documents be construed as a
standstill or a forbearance by any of the Agents, the Issuing Banks, the Lenders
or the other Secured Parties of their rights and remedies thereunder. All
remedies of the Administrative Agent, the Agents, the Issuing Banks, the Lenders
or the other Secured Parties are cumulative and are not exclusive of any other
remedies under any other Fundamental Document or provided by applicable law.
Except to the extent hereby modified, the Credit Agreement shall continue in
full force and effect in accordance with the provisions thereof on the date
hereof and the Credit Agreement as heretofore amended or modified and as
modified by this Amendment are hereby ratified and confirmed. As used in the
Credit Agreement, the terms "Credit Agreement," "this Agreement," "herein,"
"hereafter," "hereto," "hereof," and words of similar import, shall, unless the
context otherwise requires, mean the Credit Agreement as modified by this
Amendment. Reference to the terms "Agreement" or "Credit Agreement" appearing in
the Exhibits or Schedules to the Credit Agreement or in the other Fundamental
Documents shall, unless the context otherwise requires, mean the Credit
Agreement as modified by this Amendment. This Amendment shall be deemed to have
been jointly drafted, and no provision of it shall be interpreted or construed
for, or against, any party hereto because such party purportedly prepared or
requested such provision, any other provision, or this Amendment as a whole.
SECTION 9. Counterparts. This Amendment may be executed in any number
of counterparts and by the different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which taken together shall constitute but one and the same
instrument. Delivery of an executed signature page to this Amendment by
facsimile shall be as effective as delivery of a manually executed counterpart
of this Amendment.
SECTION 10. Fundamental Document. This Amendment is a Fundamental
Document pursuant to the Credit Agreement and shall (unless expressly indicated
herein or therein) be construed, administered, and applied, in accordance with
all of the terms and provisions of the Credit Agreement.
SECTION 11. Severability. Any provision of this Amendment which is
invalid, illegal or unenforceable under the applicable law of any jurisdiction,
shall, as to such jurisdiction, be ineffective to the extent of such invalidity,
illegality or unenforceability without invalidating the remaining provisions
hereof, and any such invalidity, illegality or unenforceability in any
jurisdiction shall not invalidate such provision in any other jurisdiction.
SECTION 12. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WHICH ARE
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY WITHIN THE STATE OF NEW
YORK.
SECTION 13. Successors and Assigns. The provisions of this Amendment
shall be binding upon, and inure to the benefit of, the parties hereto and their
respective successors and assigns.
SECTION 14. Headings. The headings of this Amendment are for the
purposes of reference only and shall not affect the construction of, or be taken
into consideration in interpreting, this Amendment.
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ANNEX A
REVISED SECTION 5.18
"Section 5.18 Texas Genco Option. (a) Funding of Option. Prior to the
Specified Date, RRI shall be permitted to retain Net Cash Proceeds of all
issuances of Junior Securities, which Net Cash Proceeds have not been used to
repay the Term Loans and Tranche A Loans in the amount required under Section
2.11(g)(B) or retained by RRI as provided in Section 2.11(g)(B); provided,
however, that all such Net Cash Proceeds are (A) held in the Purchase Escrow
Account and (B) all amounts held in the Purchase Escrow Account are either used
to fund the purchase of Texas Genco or are applied in accordance with the terms
of this Section 5.18; provided, further, however, that RRI shall not be
permitted to use any funds in the Purchase Escrow Account to fund the purchase
of any equity of Texas Genco if an Event of Default has occurred and is
continuing; and provided, further, however, that at any time after the
acquisition by a Credit Party or a Subsidiary of a Credit Party of any Permitted
ERCOT Asset, the aggregate outstanding principal amount of Junior Debt
Securities that may be issued, the Net Cash Proceeds of which are deposited into
the Purchase Escrow Account may not exceed an amount equal to $1 billion minus,
the Basket Debt Amount (without giving effect to clause (iv) thereof).
(b) Application of Funds Upon Purchase of Equity of Texas Genco. Upon
the consummation of the purchase of any of the outstanding common stock of Texas
Genco by RRI or any of its Subsidiaries, amounts held in the Purchase Escrow
Account may be retained therein and may be used to pay the consideration for the
purchase of the remaining equity of Texas Genco, to pay any control premium
required to be paid in connection therewith and to repay any Indebtedness of
Texas Genco required to be repaid in connection with such purchase. For purposes
of clarification, if less than 100% of the equity of Texas Genco is initially
purchased, any amounts remaining in the Purchase Escrow Account after such
initial purchase shall remain in the Purchase Escrow Account until the earlier
of (i) the date on which 100% of the equity of Texas Genco is purchased and any
required control premium in connection therewith has been paid and (ii) the
Outside Date, unless RRI elects to voluntarily terminate the Purchase Escrow
Account and apply such balance to the repayment of outstanding Term Loans and
Tranche A Loans.
(c) Limitation on Minority Interest. RRI shall not be permitted to use
the proceeds of the Purchase Escrow Account to purchase any minority interest in
Texas Genco until RRI has completed the acquisition of the Equity Interests of
Texas Genco pursuant to the Texas Genco Option or pursuant to a Permitted TG
Purchase Transaction.
(d) Application of Funds Upon Purchase of 100% of Equity of Texas Genco
or Occurrence of Outside Date. If less than 100% of the equity of Texas Genco is
initially purchased, then upon the earlier of (i) the consummation of the
purchase of 100% of the equity of Texas Genco and the payment of any premium or
the repayment of any indebtedness, in each case required to be paid in
connection therewith and (ii) the Outside Date, RRI shall cause 50% of any cash
remaining in the Purchase Escrow Account to be applied (within three (3)
Business Days) to repay the outstanding Term Loans and outstanding Tranche A
Loans, on a pro rata basis determined in accordance with the aggregate
outstanding principal balance of the Term Loans and the aggregate outstanding
principal balance of the Tranche A Loans and the other 50% shall be released to
RRI for general corporate purposes.
(e) Application of Funds Upon Expiration or Termination of Option and
there is no Permitted TG Purchase Transaction. If the Texas Genco Option has
expired or terminated and by September 15, 2004, neither RRI nor TG Holdco has
executed a definitive agreement with CenterPoint and any of its Subsidiaries in
connection with a Permitted TG Purchase Transaction (and provided, that
CenterPoint and any of its Subsidiaries has not sold or otherwise disposed of
more than twenty percent
19
(20%) of the issued and outstanding common stock of Texas Genco to a Person
other than RRI or one of its Subsidiaries), then RRI shall cause 50% of such
remaining cash to be applied (within three (3) Business Days) to repay the
outstanding Term Loans and outstanding Tranche A Loans, on a pro rata basis
determined in accordance with the aggregate outstanding principal balance of the
Term Loans and the aggregate outstanding principal balance of the Tranche A
Loans and the other 50% of such cash shall be released to RRI for general
corporate purposes. In the event that CenterPoint or any of its Subsidiaries
sells or otherwise disposes of more than twenty percent (20%) of the issued and
outstanding common stock of Texas Genco to a Person other than RRI or one of its
Subsidiaries, then (1) RRI shall provide written notice to the Agents upon any
executive officer of RRI or any of its Subsidiaries obtaining knowledge thereof
and (2) upon receipt of such notice, any cash in the Purchase Escrow Account
shall be applied as provided in the immediately preceding sentence.
(f) Funding of Purchase. RRI shall be permitted to fund and/or finance
a portion of the acquisition of Texas Genco in an amount up to 50% of the
Enterprise Value of Texas Genco with the following; provided that, subject to
the terms of the last sentence of this Section 5.18(f), any of the following are
incurred, consummated or committed (as applicable) no later than the
consummation of the purchase of any of the outstanding common stock of Texas
Genco by RRI or any of its Subsidiaries pursuant to the Texas Genco Option or a
Permitted TG Purchase Transaction (as applicable): (i) proceeds of purchase
money indebtedness incurred by Texas Genco in which case such purchase money
indebtedness shall be secured by the assets of Texas Genco and its Subsidiaries
and the equity of Texas Genco shall be pledged to the Collateral Trustee as
collateral security for the Obligations, (ii) in the event less than 100% of the
equity of Texas Genco is acquired, proceeds of indebtedness incurred by TG
Holdco in which case (x) such indebtedness shall be secured solely by the Equity
Interests of Texas Genco and not in any assets of Texas Genco and (y) the Equity
Interests of TG Holdco and any shareholder of TG Holdco (other than any third
party not an Affiliate of RRI holding Equity Interests in Texas Genco or TG
Holdco) shall be pledged to the Collateral Trustee as collateral security for
the Obligations, (iii) existing indebtedness of Texas Genco outstanding on the
date of purchase and permitted to remain outstanding (which indebtedness (x) may
be secured by the assets of Texas Genco if RRI causes Texas Genco to incur
purchase money indebtedness as contemplated by clause (i) above or (y) shall be
secured solely by the equity of Texas Genco and shall not be secured by the
assets of Texas Genco or its Subsidiaries if RRI causes TG Holdco to incur
indebtedness as contemplated by clause (ii) above) and (iv) sales or other
dispositions by RRI or TG Holdco of the equity of RRI, TG Holdco, Texas Genco or
the Subsidiaries of Texas Genco, subject to Section 5.18(j) below. The funding
of the purchase of Texas Genco shall be conducted by RRI or TG Holdco on a basis
that is non-recourse to RRI or any of its Subsidiaries (other than Texas Genco
or its Subsidiaries or TG Holdco; provided, that the assets of Texas Genco and
its Subsidiaries may only be subject to a security interest in respect of
indebtedness incurred by Texas Genco in accordance with the foregoing). In the
event that the assets of Texas Genco are not pledged to secure the indebtedness
of Texas Genco as permitted herein, RRI shall cause Texas Genco to grant a
security interest in its assets to the Collateral Trustee as collateral security
for the Secured Obligations unless the definitive loan document for any
Indebtedness incurred by Texas Genco or TG Holdco (as applicable) as permitted
by clause (i) or clause (ii) above, expressly prohibits the granting of such
security interest. In all circumstances, Texas Genco will not be permitted to
grant a security interest in any of its assets without the simultaneous pledge
and delivery of the equity of Texas Genco (other than equity owned by any third
party not an Affiliate of RRI) to the Collateral Trustee as collateral security
for the Obligations. To the extent RRI finances the acquisition of Texas Genco
with any purchase money indebtedness as provided hereunder, no term loans under
such permitted purchase money indebtedness may be reborrowed once repaid. Any
refinancing of such purchase money indebtedness may not be for a principal
amount in excess of the outstanding principal amount and unfunded commitments of
such original purchase money indebtedness on the date of such refinancing. In
addition to any purchase money indebtedness permitted under this Section
5.18(f), RRI shall be permitted to cause Texas Genco or TG Holdco to obtain a
working capital credit facility (with recourse solely to
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Texas Genco or TG Holdco and its assets) in an amount not to exceed fifty
million dollars ($50,000,000); provided, that such working capital facility (x)
may be secured by the assets of Texas Genco if RRI causes Texas Genco to incur
purchase money indebtedness as contemplated by clause (i) above or (y) shall be
secured solely by the equity of Texas Genco and shall not be secured by the
assets of Texas Genco or its Subsidiaries if RRI causes TG Holdco to incur
indebtedness as contemplated by clause (ii) above. The foregoing working capital
credit facility shall require an annual clean down of all outstandings (other
than letters of credit and cash posted) thereunder for a period of not less than
ten (10) consecutive calendar days. Notwithstanding the terms of the first
proviso appearing in this Section 5.18(f), RRI shall be able to fund and/or
finance the purchase of minority equity interests of Texas Genco after the
consummation of the purchase of equity interests pursuant to the Texas Genco
Option, with proceeds of Indebtedness described in clauses (i) and/or (ii) of
this Section 5.18(f); provided, that in no event, shall the aggregate amount of
funding and/or financing from transactions described in clauses (i) through (iv)
of this Section 5.18(f), at any time, exceed 50% of the applicable Enterprise
Value.
(g) Application of Funds in Excess of Term Loan and Tranche A Loan.
Notwithstanding the provisions of this Section 5.18, to the extent that the
amount to be applied to the payment of Term Loans and Tranche A Loans under this
Section 5.18 exceeds the aggregate amount of Term Loans and Tranche A Loans then
outstanding, such excess shall be applied first, to the mandatory prepayment of
the Revolving Credit Loans and then to cash collateralize Revolver L/C Exposure
at 105% of the aggregate face amount thereof. All mandatory prepayments of the
Revolving Loans shall permanently reduce the Revolving Credit Commitment on a
dollar-for-dollar basis.
(h) Cash in Purchase Escrow Account. It is understood that any cash in
the Purchase Escrow Account shall be Collateral for the Obligations as provided
in the Collateral Trust Agreement.
(i) Limitation on Funds Used to Acquire Texas Genco. Notwithstanding
anything to the contrary contained herein, the only source of funds used to
acquire the equity of Texas Genco shall be (i) funds held in the Purchase Escrow
Account or (ii) proceeds of permitted purchase money Indebtedness and equity
issuances referred to in Section 5.18(f) hereof. Neither RRI nor any of its
Subsidiaries may be permitted to use cash on hand or the proceeds of any Loan to
acquire any equity of Texas Genco.
(j) Rights of Minority Interests. To the extent RRI seeks to sell
equity in Texas Genco or TG Holdco, RRI shall ensure that the operative
agreement for the Joint Venture to be formed as a result of such sale, contains
the terms and provisions outlined in Schedule 5.18(j) hereof.
(k) Voluntary Termination. RRI shall have the right at any time to
terminate voluntarily the Purchase Escrow Account upon five (5) Business Days'
prior written notice to the Administrative Agent and the Collateral Trustee.
Upon any termination of the Purchase Escrow Account, RRI shall cause all amounts
on deposit in the Purchase Escrow Account to be applied in accordance with the
first sentence of Section 5.18(e) hereof.
(l) Termination upon the Acquisition of Permitted ERCOT Assets. In the
event that RRI or any Subsidiary of RRI acquires Permitted ERCOT Assets with an
aggregate ERCOT Asset Purchase Price of more than $250 million, the Purchase
Escrow Account shall terminate automatically and RRI shall cause all amounts on
deposit therein shall be applied in accordance with the first sentence of
Section 5.18(e) hereof.
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